Individual Lawyers Exempt From Depositing Service Tax.

The Govt. of India has released a notification recently on March 17, 2012 to lay down rule about the payment mechanism of service tax in case of Arbitral Tribunal and individual lawyers.

After the budget speech this year, the Finance Minister had done away with the incidence of service tax liability of certain area of work done by individual lawyers. The brief post about it done by http://www.legallyindia.com can be accessed here.

However, after the budget, the Govt released a notification detailing about the payment mechanism of service tax. The notification No. 15/2012-Service Tax dated  March 17, 2012 can be accessed here.

By this notification, the Govt has laid down that the person receiving the services shall be liable to deposit the service tax instead of the person providing the service. Meaning thereby, as an individual lawyer, when I am providing some legal services to a Client, he has to inform his chartered accountant about the bill and deposit service tax on the legal services obtained.

Vide a separate notification No. 19/2012-Service Tax, dated June 5, 2012, which can be accessed here, the Government appointed July 1, 2012 as the effective date from which the changes in the service tax regime shall come into force. A connected article can be accessed here.

In a way, it is quite convenient for lawyers who do not have to maintain any service tax record for depositing it since the entire liability is of the Client to deposit it. The invoices, however, should refer about this for clarity to the Clients.

The Govt has also assured that the number of Assessee increases and non compliance shall also entail fine.

Good move for the lawyer fraternity but it also might increase legal proceedings on this aspect since the Client might default in payment of service tax.

Let us see what happens as the dust settles.

Dushyant K. Mahant.